S&P Global Ratings released an analysis covering 17 top pharmaceutical companies. The report identifies significant concentration risk as a "material weakness" for several industry giants.
The analysis specifically cites companies like Merck and Novo Nordisk. For these firms, more than half of revenue stems from a single product, such as Keytruda for Merck or semaglutide for Novo Nordisk.
S&P suggests revenues for these companies could fall by roughly 9% annually without continuous reinvestment in R&D and mergers. U.S. pharmaceutical companies dedicate about 16% of their revenue to acquisitions. This rate is double that of European firms.
While this acquisition strategy has supported growth, it has also gradually eroded credit ratings. This erosion is directly linked to increased leverage.